September 12, 2012
Student Loan Repayment and Consolidation
We often get questions about repayment of student loans and loan consolidation options. Here is a quote from the Student Loan Network website:
“Student loan repayment should be seriously considered prior to taking on debt. Typically, it will take students 10 to 20 years after graduation before they are able to repay their student loans in full.”
Review all of your loan documents to insure you know how much you owe. Talk with your lenders about repayment plans. Do a budget and figure out where you are spending your money and if there are ways you can save.
The general advice is to make sure you pay off your high interest debt first. Generally federal loans have more favorable repayment terms than private loans – so weigh your options carefully. Finally, consider consolidating your loans to reduce the number of payments you have to make. (note: you will want to keep your private and federal loans in separate consolidation. Consolidating private loans with federal loans may eliminate the benefits of the federal loan programs).
For more information, visit: http://www.consumerfinance.gov/students/repay/
August 28, 2011
How do I Fill the Gap between what College Costs and the Financial Aid Awarded?
Struggling with finding the last dollar to pay that college tuition bill??? Here is a good overview of the challenges and some options to manage them…
It is no secret that college is expensive and tuition costs are continuing to rise. We put together the infographic below to examine the costs associated with a college education, including the hidden costs you may not be factoring in like health fees, gas money, entertainment and all the Red Bull you’ll consume during finals. The graphic also outlines how funding occurs and how students can fill the gaps left in paying for college. Feel free to share with your fellow students, friends and family!
August 10, 2011
Parent PLUS or Private Loan: Which is Better?
One question that comes up a lot from parents is how to fund the remainder of your child’s education, after federal loans of course. There are a variety of options out there including Federal PLUS loans and private college loans. It can be difficult to decide on which loan is right for your family, so to help you in the process, I’ve explained some of the major benefits and drawbacks of each below.
Parent PLUS Loans
Parent plus loans are available through the government and offer a variety of benefits. Benefits such as deferment, forbearance, and even some cancellation options are a perk of PLUS loans that are not always available with private loans. However, the interest rate is a fixed 7.9%, and higher than some private loans.
One of the most common questions from parents about the PLUS loan is in regards to the credit check. The credit check for PLUS loans is minimal and it’s mostly to make sure that there is no recent bankruptcy or adverse history on record within the past 5 years. If you’re still concerned that your credit will hinder your ability to receive the loan, you should continue with the application process, as students whose parent’s get denied a PLUS loan are entitled to further Stafford loans (at lower interest rates than the PLUS).
>>Read more answers to Parent PLUS loan FAQs
Private Loans
Private loans may actually be a better option than the PLUS loan for some families. Interest rates are now very competitive and come in both fixed and variable. This would allow for less interest over the lifetime of the loan than the Parent PLUS. You should also note that while the loan holder in this case is the student, most loans will suggest that a parent cosign for the student, which is generally a good idea anyway, as it improves approval chances and may lower the interest rate for the loan.
A downside of private loans is that many of the repayment benefits that you find with federal loans are not all available, however, the lower interest rates could outweigh this point. There are also other benefits of private loans to consider, such as the disbursal method. Unlike federal loans, private loans get disbursed directly to the student, so they can pay for immediate expenses such as books, or room and board.
>>Compare private student loan options
There is no real answer to “what is the best loan” because this is too subjective and is different for everyone. There are a lot of different factors to consider when looking into funding your child’s education and it comes down to not which loan is the best, but which is best for your family. To help you decide, you’ll simply have to weigh the pros and cons of each option.
July 1, 2011
Where to find Student Loans
Usually at this time of the year, students have applied for all the scholarships, grants and federal loans they are going to get. There is often a gap between what they have received in aid and what they are going to pay. A last minute option are student loans. Before applying we suggest you do two things: Review our Lenders and compare student loan offers.
Surprisingly, many people are unaware that there are privately funded student loans to help pay for college. In short, they offer students the option of borrowing to cover the cost of education including tuition, fees, room and board as well as other related expenses.
July 30, 2010
Can I transfer a Parent PLUS Loan?
Many parents, who take out the Parent PLUS Loan, believe they could always transfer the loan to the child, once he or she has graduated and secured a reasonable income. Unfortunately, that is not the case. The PLUS Loan is the responsibility solely of the parent, and is taken out in the parent’s name. He or she is the borrower, not the student.
One option, if finances become an issue for the parent, is to simply have the student reimburse the parent for the cost of the monthly payment, but continue to make the payments in the parent’s name.
If, as a parent, you would prefer a loan that allows you to eventually transfer the repayment obligation, consider a private student loan. These loans are in the student’s name, and depending on the lender, generally have a cosigner release option. After a certain number of consecutive on time payments, the parent (as a co-signer) can apply to be released from the loan, making it entirely the student’s obligation for repayment.
May 6, 2010
Parent PLUS or a Private Student Loan? What should I pick?
If your child received their financial aid award letter and there weren’t enough digits on the page to cover tuition, you are definitely not alone. The cost of college continues to steadily grow every year, but financial aid has not kept the same pace. As a result, the gap between aid and cost continues to grow.
Once your child has exhausted the annual maximum for Stafford loans, the next step is to look at credit-based options to bridge the financial aid gap. Fortunately for you, there are quite a few lenders that all must compete with each other to make money and therefore give you an opportunity to minimize the interest rate on a new loan.
If you’ve read a few posts on this blog, you know the score on Parent PLUS loans, but what about private student loans? There are a few notable differences… and in some cases they can become more attractive than their federal counterpart.
Major Differences:
- Private student loans have variable interest rates (meaning they change with the index they are associated with… most commonly LIBOR or the Prime)
- They come from banks instead of the Department of Education
- Many banks offer special incentives to make a private student loan more worthwhile
At the moment, interest rates are quite low due to the Fed attempting to put the economy back on a growth track out of the recession. This means that the indices are at historical lows and with a creditworthy borrower, you can secure a great interest rate that can be as much as 5% lower than a Parent PLUS loan.
If you want to learn more about some of the incentives that private lenders offer, check out this blog on the Student Loan Network.
The bottom line is just do some research before you take out a loan. In many cases, you can save thousands of dollars in interest if you shop around.
December 3, 2009
Does A Parent Plus Loan Have Fees?
YES. Parent Plus loans do have fees.
The standard fees attached to a federal Parent Plus loan include a 3% origination and a 1% default fee. That 4% can be quite significant too if you are taking out a great deal of money for your student. It’s also important to note that those fees are taken right off the top as well. So if you need $10,000 you should apply for $10,400. That way $10,000 will make it’s way over to the school.
You may also find that some lenders are willing to waive the default fee. If this is the case jump on that deal. A 3% fee is obviously better than a 4% one.